We Energies asks to close plant in city

September 11, 2013

MARQUETTE - We Energies has filed a request with its regional transmission organization to suspend operations at the Presque Isle Power Plant.

The request comes just weeks after Cliffs Natural Resources announced it would switch electric suppliers for the Empire and Tilden mines, shifting from We Energies to Chicago-based Integrys Energy Services Inc.

"The reason that we have made that filing and have requested to suspend operations ... was because after the decision by the mines to change the power suppliers, we had to rebalance our supply in order to better match what is now a reduced demand," We Energies spokesman Brian Manthey said today. "That supply comes from the Presque Isle Power Plant, for the most part."

Article Photos

We Energies filed a recent request with its regional transmission organization to suspend operations at the Presque Isle Power Plant, seen here from Lake Superior. The request, officials said, is a direct result of a decision by Cliffs Natural Resources to no longer purchase power from We Energies. (Journal photo by Jackie Stark)

The request - filed recently with the Midcontinent Independent System Operator, which oversees electric distribution in 15 states and the Canadian province of Manitoba - calls for plant operations to be suspended beginning in February of 2014. Manthey said officials anticipate an approved suspension would be for about a year. The company would then have the ability to request extensions.

However, if MISO ultimately decides the plant is too vital to the stability and reliability of the regional electric grid, the organization may agree to offer "system support resource payments" to We Energies in exchange for keeping the plant in operation. Those payments may ultimately be factored into electric rates across the MISO footprint.

"We've got to look at whatever options or whatever is out there to rebalance the supply or to take a look at what the costs are and if the costs should be borne at this point, with the reduced demand," Manthey said.

Previous MISO studies have indicated that the Presque Isle Plant is important to regional electric reliability, but have advised against the construction of additional major transmission infrastructure in the event the plant is operational.

The Cliffs decision has also impacted the long-term prospects for the plant, and Manthey said officials are revisiting the specifics of a joint venture with Cadillac-based Wolverine Power Cooperative.

The original deal called for Wolverine to invest between $130 million and $140 million in pollution controls at the plant, in exchange for a minority share.

"Because of the change in our perspective to the plant, our supply of power, we have talked with Wolverine about making changes in the joint agreement," Manthey said. "For the long term, unless changes can be made to the agreement, the situation could lead to the full or partial death of the plant."

Manthey would not state what changes, exactly, We Energies officials were hoping to see.

He said the current agreement has been approved by the public service commissions of both Michigan and Wisconsin, as well as the Federal Energy Regulatory Commission. Approval is still needed from the Michigan Department of Environmental Quality.

Ken Bradstreet, government affairs consultant with Wolverine, verified today that talks were ongoing with We Energies. He said the specific details of the discussions were unknown.

"Of course we're talking to We Energies, because this is an important project we're engaged in and there's some real significant issues that have come out as a result of the decision by Cliffs," he said. "We're still continuing to pursue the necessary permits, and we'll continue to do so until instructed otherwise."

About 170 people are currently employed at the Presque Isle Power Plant.